One Democrat From Disaster

By October 11, 2001, just thirty days after 911, there were precious few Americans that weren't grateful that George Bush was President and that Al Gore wasn't. As someone who has very little faith in any branch of government, it was encouraging to learn that occasionally even the Supreme Court gets something right. On the other hand, Al Gore got over a million more votes than Bush, proving that the voters got it wrong. George Bush was President that day because the Founders got it right; the Constitution saved us again.

This is the first in a series of articles that I will be posting with one article appearing every Tuesday and another on Thursdays. I would like to invite each of you to read and add your comments to the discussion of these ideas. I hope to make the articles informative and provocative. By the time we reach the conclusion, I hope that we will have outlined the problems facing the United States, how these problems came about, the consequences of not properly addressing these problems in a timely fashion, the potential solutions and a prioritized list of preferred solutions. Properly done, we will all have a better understanding of America and the limited role that government should play if we are to recover the freedoms we have lost and hope to restore a proper Constitutional balance of power to the various parts of government.

Most people believe that under our Constitution the powers of government are balanced and limited by dividing power among the three branches of government. Government and practically everyone else seems to have forgotten that there are really four parties who exercise power with regard to the government. If We the People fail to limit how much power the other three branches can have and how that power can be exercised, We should not be surprised when the other branches of government exceed their authority and usurp more power for themselves. History has repeated this verse in every country in every century. Left to its own devices, no government has ever decreased in size or power.

If We the People, are going rein in government, there are only three ways that are practical to consider within the time constraints imposed by the economy coupled with the accruing, but unfunded liabilities that have been promised by professional politicians. This series will be making repeated references to the Grandfathers Economic Report. This is an excellent source for evaluating where we are and how we got here. We will be referring repeatedly to the study ordered by former Secretary of the Treasury Paul Oneal. The study was done by Jagadeesh Gokhale, Senior Economic Advisor, Federal Reserve Bank of Cleveland/Visiting Scholar, American Enterprise Institute (2003) and Kent Smetters, Assistant Professor The Wharton School, University of Pennsylvania-Deputy Assistant Secretary for Economic Policy at the U.S. Department of Treasury from 2001-2. This study indicates that it is not possible to fund the accruing, but as yet unfunded liabilities of Social Security and Medicare using reasonable economic projections. Given our history, cutting benefits and increasing taxes by the orders of magnitude required using reasonable economic projections will be incredibly challenging from a political perspective, if not frankly impossible.

The problems that confront the United States are not only economic, but structural as well. We are going to examine some of these problems in a fair amount of detail in order to understand how serious and how large these problems are. Most Americans under-estimate the severity of our problems and are overly optimistic about the amount of time that we have to confront and solve them. There is an old accounting and financial adage, "Unsustainable trends end." The growth of government and socialism in America are unsustainable trends. Professional politicians set these trends in place. It is my opinion that professional politicians will not play a significant roll in finding solutions to the problems that they have caused. And it is prudent to believe that Democrats can be expected to get in the way of finding reasonable solutions. Unchecked, unsustainable trends end in crashes. It will be up to us, We the People, to decide a reasonable way to bring about the end of these unsustainable trends. Professional politicians moved America away from being a representative republic. Professional promisers have made the United States a democracy by surrogates. Democracies are themselves political examples of unsustainable trends. And unchecked, we know how democracies end. Gokhale and Smetters have proven that Democrats have taken us to the brink of financial disaster and Democrats can be expected to prove to be formidable political opponents to finding rational solutions to our problems.

By the time we finish this series, some of you will share my belief that America will be unlikely to survive either the election of another Democrat to the Whitehouse or the recovery of both houses of Congress by the Democrats. Some will share my belief that the United States will not survive past 2016 unless we bring about major changes in Social Security and Medicare. Regardless of whether you end up sharing any of my views, we should all end up better informed and just possibly, we may find the solutions to our problems. I can tell you for sure that if We don't, nobody else will. Government bureaucrats have never found anything until it was too late, and the professional politicians in office are only going to compound the problems, not implement solutions.

I hope that you find these discussions informative and thought provoking. Please ping your friends and/or enemies alike. Freep mail me if you would like to be added to the ping list for this series. There may be any number of solutions to our problems and I may be over-estimating the severity of the problems and/or under-estimating Americans. History has proven time and time again, the resourcefulness and productive genius of the American people. But I hasten to caution, only God never drops the ball. And it is unarguable that Americans have been getting fat, dumb and lazy. Please invite your family and friends to participate in these discussions. And please invite and welcome Democrats to the discussion. Changing America for the better would be made a lot simpler if we can convince a few Democrats that they are on the wrong side. Government is composed of bureaucrats and politicians. Can you think of any worse groups of people to entrust with important responsibilities? Whom do you believe is the source of our problems? If you believe that government is the solution to anything, please pay careful attention to these discussions. But be forewarned that you will face stiff opposition in defending your views.

No, they haven't won, and your logic is getting quite tortured. The USSR was a regime that could be brought down by traditional military force, and there were never any long-term communist "rebels" or "insurgents"---due to the doctrine of Marxism itself---that can work without a national power base.

That is quite different from a "religion" that preaches individual suicidal violence. I agree, freedoms are not always restored---but in many ways, there are more freedoms (like them or not) than 50 years ago: blacks can travel in peace throughout the U.S. without fear of lynching, We have freedom of speech that far surpasses those existing in Lincoln's time. We have sexual freedoms from the state that Jefferson would have gagged on. We have virtually unlimited freedom of religion that the Founders would have rejected. So, no, we don't always give up freedoms.

BTW, depending on how you look at the stats, terrorism rose during the Reagan years, and if he was FDR, and served out four terms, you can BET he would have declared a "war on terrorism" the minute Gorby took the plunge, because he was perceptive. Your "peace dividend" is that you are not saying "Seig Heil" or marching to the commissar's tunes. If you really think you are, then we have little to discuss.

Your points are based on a reasonable premise, Americans have eventually risen to the occassion of every adversity or in the end things have worked out. That being said, let me ask you if you believe that Social Security is based on a sound financial platform of savings, followed by investment, followed by the expectation of higher payouts. This is how capitalism actually works. And the flip side of the question, is SS based on a Ponzi or pyramid scheme where money that has been paid in is paid out immediately and that when current payers become beneficiaries that there will be new payers or fewer numbers of payers that are willing to pay substantially more to meet rapidly rising obligations.

Social Security has the structure of a pyramid scheme. It is facing a large wave of increased numbers of beneficiaries who are expected to be living longer and who will each be expecting inflation adjusted increases in their benefit payments. Those payments are going to be made by declining numbers of workers who are facing earnings ceilings imposed by the global reality of China and other cheap labor markets who will be increasingly competeing for wages with American workers.

The history of SS in about to be reversed. In the past, we had increasing numbers of workers (boomers) supporting retirees in a time of rising wages. If you accept the premise that SS is a Ponzi scheme, Ponzi schemes are unsustainable trends that will end. Even if you don't accept the premise that SS is a Ponzi scheme, the current economic trends in place make SS an unsustainable trend.

And finally, there is no Constitutional authorization for SS. SS is an unsustainable political reality. It is my contention that SS is going to end and there is no other reality possible. How it is going to end is a completely different question. There is a painless option available, but it will be politically difficult to sell to politicians in office who derive their power from manipulating this fraudelent scheme. Your skepticism is shared by many. There are substantial numbers of Americans who believe that we have muddled through in the past and those same people like you believe that we can probably muddle through again-these are the people who are not sure whether it is broke and if it ain't broke don't fix it for fear that anything done to make it better will inevitably make it worse.

If you look at the history of SS, each time the government has raised the tax rate or extended the income ceiling on which workers are taxed, it is actually an example of the failure of the program. The program has failed repeatedly, but each time politicians have been able to convince the public by making the program an even bigger fraud that we can keep the pyramid floating a little longer. This apparent success is an illusion and it is the illusion that makes chain letters possible and keeps them going. In the case of SS, there are now huge numbers of beneficiaries and huge numbers of people nearing retirement expecting to become beneficiaries who just want to keep the chain letter going long enough for them to get "their share" and after that let the rest of them figure out how to deal with the aftermath.

Government and politicians are good at claiming credit for something that seems to work or claiming credit for something that turned out well. The media in the US all favor the growth of government. But ask yourself is the government due any credit for anything or should all the credit that government claims for itself actually be given to the American people. It is my opinion that there is virtually nothing that government does that would not be done better by non-government means. And if there is something as important as my retirement income or health care, would I rather be in control of my own destiny or would I rather have government in control. There really is no choice between these alternatives. Democrats primarily and maybe some other politicians have made participation in SS mandatory, as in compulsory. Why do you suppose they did that? Do you really believe that America is a free country while politicians take over 12% of your current income so that they can control a major part of your retirement planning and income stream? Is that your idea if freedom? It certainly passes for some people's idea of security. And they are basing their opinion on the history of an unsustainable trend. Even the image of apparent security is an illusion if people would analyze what their retirements would be like if they were in control of the funds. SS is nothing more than a shell game and we have all been made the victims.

Add your name to the ping list and find out what real savings and investment can do for your expected retirement income stream and what it might look like if you had control of it.

Most of the Patriot Act is an illusion of security. It is a political response to a perceived need. What makes it an illusion is what the government is actually doing as opposed to what the PA authorizes it to do. Take air travel as an example. If govenment were actually forced to comply with the Second Amendment, the presumption would be that every American getting on an airplane in the US might have a gun. How many planes would be flown into buildings? Government has had the means and the authority to screen baggage for bombs since air travel became a reality. Government security is largely an oxymoron.

Most (all) terrorists fit a racial profile. Government "security" forbids racial profiling. Border control would seem to be a logical part of "homeland security". What is the government's record on border control and illegal immigration? What is the government's record on legal immigration for that matter? I think every one of the 911 terrorists was in the country legally.

What are the roots of terrorism and what is government doing about it? Some of the roots of terrorism are found in Israel and some in oil. The US rejected letting the post WWII Jews immigrate to America and ended up shipping them to Israel through the UN. Our government created the Israeli problem. And we keep meddling in the middle-east because we refuse to drill and produce our own oil and by refusing to pay market prices for Opec oil.

Government courts seem determined to extend the rights of citizens to non-citizens while denying citizens the Constitutional protections promised in the Second, Fourth, Fifth and a slew of other portions of the Constitution. Government "security" is more about protection for politicians than protection for American citizens. And just as government planning and government education are oxymorons, so is "homeland security" under the "patriot" act. Calling this the "patriot" act is offensive and pure propaganda. The results of the act will not be patriotic nor will it result in the same level of security that would result from government simply using common sense and successfully using the powers that it already had.

This should be a neat trick, since Republican control of all three branches has so far yielded:

Expanded federal role in education
Massive increase in farm subsidies
Campaign Finance Reform
Tarriffs on steel and agricultural products
Tax refunds to people who don't pay taxes
Prescription drug benefit for Medicare (pending)
Federal budgets that have exceeded our economic growth rate every single year, even after accounting for defense

If this is conservatism, please count me out. I don't remember anything this radical happening when we had divided government. Sure, there was Hillarycare, but it failed. Today's Republicans are likely to dust it off, a call it their own and go ahead and implement it.

Please, please let's go back to stalemated and impotent government. The power has corrupted the party.

Please don't post six paragraphs. I'm not reading that much again. In short, everyone knows SS, without changes, cannot be solvent. It can be solvent with proper changes. If I were dictator, would I have it? Of course not. I show my students a chart comparing what they have in SS "earnings" in 40 years vs. what they would have if they left the money in the bank or put it in the Dow. They get the point.

SS is a reality, and anyone talking about a quick scrapping of it needs to get a clue. But Bush has the right idea. Begin with a small, partial privatization; stair-step it up each half-decade, until at some point it would be optional only for those who absolutely think they can't save on their own.

But as you surely know, there is no SS "Trust Fund," and we are talking about total government revenues. So if it gets to the point that we are forced to cut "farm subsidies" or cut "SS," then that will be a decision our society will make, and I'm confident, when the time is right the people will make the right choice.

You didn't request it, but I have taken the liberty of adding your name to the ping list for this series. If the problems facing America are to be solved, Democrats must be defeated and relatively powerless. The second leg of of this effort will be to bring the Repbulicans back to reality. We need more comments and thoughts on this effort. Your voice will be welcome. Stalemated government will end badly.

And for the benefit of LS, keep your eye on this series. You are going to find out that we don't have decades to deal with this problem. The boomers start reaching retirement age in the fall of 2008 and become eligible for Medicare in 2012. If we haven't dealt effectively with the problem by then, some Americans are going to be hurt and maybe badly. Instead of responding, please read the SS trustee's report and the Gokhale and Smetters study. After that, here is a link (http://www.socialsecurity.org/pubs/testimony/ct-jp062697.html) to the Cato model for SS. I am sixty. Social Security is going to end in my lifetime. This series is about seeing that the end benefits America instead of destroying it.

My whole point in even bringing up the stupid Pat Act is that it will be used to enhance revenue collection from the underground economy! That's it, and that's all I was insinuating, period.

The discussion was about the deficit and how it can be so distorted in future projection due to unintended consequences and unforseen circumstances and I wanted to point out that they've plugged a lot of the data gathering gap with the PA!

No, I'm not negative on the act, just think it's too clever by half as a way to sneak better revenue enforcement into the future, without upsetting the populace. I get pist having to fill out more dang forms and asking to see photo ID and keep more records for the benefit of the danged government. That's all that's being a burr under my saddle.

I'm not a Libertarian, but we're becoming more of a "snitch" society than the USSR was and I don't want my country to become the USSA!!!

So, Mr. Wasp. What kind of retirement could you expect if you put $255.00 per month into a mid-cap fund, increasing that amount by 5% annually for 40 years?

Why $255.00 per month? Social Security taxes are 7.65% of the first $85,000.00 of income, roughly. I assumed $40,000.00 yearly income - take 7.65% you get $3060.00 - divide by 12 = $255.00.

My gut feeling is that the mid-cap retirement would vastly outperform what you would expect from Social Security. Of course, your retirement account doesn't have to pay for alcoholics on disability, or any of the other myriad social engineering experiments.

We are living in an era where the socialist "thinkers" of the 1930s and 1940s and their spiritual descendants have succeeded in introducing so many insanities to our body of laws and inane regulations that most of us have lost faith and trust in our government's ability to do its job.

For example, if you live in California, and want to go to college, you pay resident tuition. If you are an American citizen, but decide to move to Sacramento from Reno to go to Sac State, you must pay a much higher non-resident tuition. Now here's the insane part. If you sneak over the border from Mexico and enter California illegally to go to college, you only have to pay resident tuition. There are many more examples, this is just the latest on my mind out of a list that would be over a thousand pages long.

The battle to save America is not a political battle, it is a Philosophical battle. At the risk of offending just about everybody, this is the way I see it (emphasis mine):

To rush into politics on an intellectual shoestring, to posture as a champion of freedom, to get into power by cashing in on the people’s hope and despair, then to offer them, for inspiration and guidance, nothing better than the old religion-family-tradition stuff – the stuff that has lost the world to communism – is so dark a betrayal that those guilty of it deserve what they get. They do not merely lose, they disillusion the people, they discredit the ideas of a free society and thus assist the victory of statism.... So much for today’s conservatives, “Libertarians,” and sundry third- fourth- or tenth-party organizers.
--Ayn Rand, A Last Survey, Part II (The last article in her Ayn Rand Letter), January-February, 1976

The one sentence highlighted above explains why the republican party is so fractured and disillusioned. We keep fighting to get these guys elected, only to find out that they like bigger government and less freedom just like the other guys.

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